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Brewers seek tax relief on destroyed product

Fuseworks Media
Fuseworks Media

The Brewers Association of New Zealand has requested government to allow for refund or remission of excise tax on returned product that is then destroyed.

"With bars and restaurants unable to open for significant periods of time, and some being forced to close entirely, much of the product kept on had (including kegs that were already "tapped" or open) will deteriorate to such an extent that it is unable to be re-sold and will therefore need to be destroyed." Says Dylan Firth, Executive Director of the Brewers Association of New Zealand.

"The brewing industry, like many other sectors in New Zealand, has had a difficult 18 months so far. With two of its three channels to market closed over the various 2020 lockdowns through bottle stores and hospitality venues. Then again with the latest level 4 in the largest market and subsequent level 3 announcements. This has had a real impact on those in the brewing industry and with the wider hospitality industry still at a fraction of where it was pre-Covid-19, there is a long road to recovery on the horizon." Said Firth

"Government received $411 million in excise tax from the brewing sector in 2020, what we are seeking will by no means make a dent in the governments tax take, but it will help alleviate an issue for brewers large and small." Said Firth

"The sector faced this same issue in 2020 on a much larger scale with reports of over 15,000 kegs in market being disposed of. All the while businesses still were required to pay excise tax, which is defined as a consumption tax, on a product that was ultimately not consumed." Said Firth

"When we approached the government last year, the Customs Minister was sympathetic to our issue and our understanding is it was considered at a high level but ultimately by the time the decision was made not to allow for rebates or remissions, this was a real blow." Said Firth

"It’s quite disheartening when you hear statements that Government has done all it can, when for us there is a simple regulatory fix which would allow for our issue to be resolved. Currently if a product is deemed unsellable for whatever reason before leaving a brewery it can be disposed of and no excise tax is paid. What we are seeking is merely an extension of this ability to allow for returned product." Said Firth.

"This is not some sort of isolated event. Internationally brewers have faced the same issue. We saw in Australia in 2020 the government was hugely supportive by allowing product to be returned and no excise paid. Not to mention this year they extended an excise rebate to producers of up to $100,000. While our neighbours and our largest beer export market have this advantage over New Zealand producers, we don’t. So, we see there is a pretty strong precedent for our government to follow." Said Firth

"Contrary to some reports that have focused on specific buying patterns immediately pre and during lockdowns, sales of beer did not increase in 2020 and in fact declined by 1.7% according to Statistics NZ data. Furthermore, while this reduction may seem small, it does not reflect the change in consumers habits from purchasing their beer in bars and restaurants and moving to off-premise or supermarkets, this transition to other purchasing locations has again been hugely costly to the hospitality sector." Said Firth

"Our members have been the first to acknowledge the role of industry to support our own where they can. To date our members have committed to support the wider hospitality sector through renegotiation of debt, extension of credit, cash back for unused product which was spoiled over lockdown in 2020 and multi-million dollar spend in marketing encouraging consumers to support local. Now we are asking for the Government to step in with support." Said Firth

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